Tesla drops 17% after exec says virus outbreak would hit deliveries
SAN FRANCISCO : Tesla's stock tumbled 17 per cent to US$738 (S$1,022) on Wednesday, hitting the brakes on a dramatic rally.
This was after a senior executive said the coronavirus outbreak in China would delay deliveries of its Model 3 cars, and analysts warned of its high valuation.
With Tesla still up more than 25 per cent since the company posted its second consecutive quarterly profit a week ago, Canaccord Genuity cut its rating on Tesla to "hold" from "buy," further shrinking the already small number of analysts who recommend buying the stock.
Tesla vice-president Tao Lin said on Weibo that car deliveries from its new Shanghai plant would be temporarily delayed and that the company planned to restart production on Feb 10.
The US$2 billion factory is a key part of chief executive Elon Musk's plan to make more than half a million cars this year.
Needham analyst Rajvindra Gill, who recommends selling Tesla, warned in a report that Tesla's stock is trading at extreme price-to-earnings multiples compared with many leading technology companies.
Even after Wednesday's drop, Tesla is trading at about 55 times expected 2021 net income, compared with Amazon at 49, Apple at 22 and Alphabet at 23, according to Refinitiv data.
"We have never seen a stock rise that much that fast with such little regard to past fundamentals or track record," Mr Gill wrote. - REUTERS